A proposal to rebuild the Virginia Avenue tunnel in Southeast Washington, which officials say is needed for safety reasons and to meet East Coast rail needs, appears to be moving forward after years of delays.

The District Department of Transportation and the Federal Highway Administration on Friday released a final environmental impact statement on the project, laying out a preferred construction process that the agencies say balances CSX Transportation’s need to reconstruct the 110-year-old single-track tunnel and neighbors’ concerns.

The project has become one of the District’s most hotly debated proposals. An entire community in Southeast is fighting it, with some elected officials also raising concerns about rail safety and the risk of having freight trains passing through residential neighborhoods and the seat of the federal government.

The completion of the federal review process, however, moves the project a step closer to construction and lays the groundwork for what could be the realization of an important upgrade to the city’s rail infrastructure.

Rail freight in the United States is projected to increase 35 percent by 2050, according to the Federal Railroad Administration, and there are increasing demands in the Interstate 95 corridor. CSX says it needs to increase its tunnel capacity to meet that demand.

The environmental impact statement supports a plan to replace the tunnel that runs beneath Virginia Avenue Southeast, from Second to 11th streets, with two permanent tunnels built consecutively. Each of the new tunnels would have a single railroad track with enough overhead space to allow double-stacked freight cars. Trains would continue to use the current tunnel while one new tunnel is built. When the new tunnel is completed, train operations would shift there, and the old Virginia Avenue tunnel would be demolished and rebuilt.

“This alternative also enhances the safety of the tunnel and railroad operations by providing a center wall in the new tunnel separating the two sets of tracks, which will provide the benefit of isolating any derailment within the tunnel,” the federal report says.

The plan is consistent with CSX’s goals to turn the tunnel’s one-track configuration into two tracks, addressing a bottleneck that is created when trains passing through the tunnel merge from two tracks to one, slowing the movement of freight up and down the East Coast. A rebuilt tunnel also will allow CSX to run the double-stacked trains that are now standard in freight shipping across the country.

DDOT and FHA officials will hold a public meeting July 1, where they will discuss the final report. After the meeting, the federal agency is expected to release a record of decision, which could give CSX approval to seek construction permits for the project. CSX would need to go through the District’s permitting process before construction could begin, but company officials say they hope to break ground on the $170 million project this year.

DDOT has already agreed to give CSX the right to take over Virginia Avenue to implement the project, but CSX would need other permits to start construction.

But residents say giving CSX the green light to build would be premature, especially now that the District is considering spending $500,000 to study and develop a comprehensive rail plan for the city. A majority of the residents who live near the tunnel didn’t like any of the construction alternatives, and during the review process, they raised concerns about the impact on their communities, including vibration, noise and any disruption to getting to their homes during the process. They also worry about their property values.

“We absolutely should not be moving forward with a massive rail infrastructure project before we know exactly how it is going to affect our plans for passenger rail and commuter rail coming through the city going forward,” said David Garber, a member of the Advisory Neighborhood Commission who represents the Navy Yard neighborhood. “This is a rail line that doesn’t have any positive benefit to the city in any possible way.”

Residents say the report does not appear to address their requests to explore rerouting options. It also doesn’t address their concerns about how the proposal will shift the tunnel closer to residential homes.

“It is disappointing,” said James McPhillips, a lawyer who moved to a rowhouse on Virginia Avenue nearly two years ago. “For months, people have been raising a lot of good points, and [officials] have essentially ignored them.”

In recent months, residents organized to make a case against CSX, with much of the focus on the risk of having trains so close to monumental Washington and fears of derailments, citing a number of recent incidents across North America. In late April, a CSX freight train derailed in downtown Lynchburg, Va., spilling rail cars and burning crude into the James River.

CSX officials say the tunnel has critical structural problems, including water issues and brick deterioration, and is at risk of failure. The tunnel requires increasingly more frequent inspections and maintenance to keep rail operations safe, according to the company and the environmental review.

“The longer it is used without replacement, the sooner it gets to failure,” said Steve Flippin, director of federal affairs for CSX. “It’s in everyone’s best interests to replace it before that happens.”

If there was a tunnel collapse or if it failed an inspection, emergency work would require crews there 24 hours, seven days a week, CSX says.

But residents say construction will disrupt life in the vibrant up-and-coming community just minutes from Nationals Park and a mile from the U.S. Capitol. Residential, office and commercial development in the area has boomed over the past decade, and although residents concede that they knew the rail line was there when they moved in, trains were hidden by the tunnel.

Construction will mean the loss of as many as 111 on-street parking spots during the work. Virginia Avenue would remain closed between Second and Ninth streets SE, but the cross streets will stay open except for brief periods when crews would be installing cross bridges.

This construction option, the impact statement says, also addresses the community’s concern about trains running through an open trench during construction. Unlike other options that were considered, this alternative accommodates train operations in a closed tunnel — at least for most of the tunnel’s stretch. A small portion, about 230 feet, will be open during construction.

“Just because the dangerous condition is slightly shorter, it doesn’t make it any less dangerous to those who are near it. It doesn’t help me sleep at night knowing that there’s trains running through an open trench for two blocks, because it is two blocks too many,” McPhillips said.

CSX has proposed a mitigation plan that includes improving area parks and streets once construction is over. It also plans to offer monetary compensation to residents in closest proximity to the construction and up to $75,000 to make up for property devaluation for residents who choose to sell.